I know this has probably been discussed, but I am curious to know how other forum members feel about where the future of Adwords is headed, especially when it relates to CPC and Keyword Bidding.

I've been managing an account for a little over 2 years, with a very healthy budget for a small business, it exceeds a little more than 1 million dollars.

When we first started there were very few people in our space and naturally as the business grew, more competitors came in and began bidding on our keywords, the price of the KW slowly began increasing and obviously today the price per KW has increased significantly, even though we have maintained and progressively increased our CTR, spend lots of cash and convert.

So what can we look forward to with Adwords as we head into the future? Its seems to me that as we and other businesses continue to market on the web, the space is going to get limited and the barrier to entry will get more difficult with time.

Question: How much is enough? And what will the market be willing to pay for space on Google in the future? Will small businesses be squeezed out by the bigger guys eventually? Will Adwords be a relevant avenue for small to medium sized businesses?

As more markets become saturated I dont see how Google can manage this unless they put some controls on costs. What i do see is an opportunity for other search engines to offer better, cheaper space on their serps.

Again, I am sure this has been discussed before but I really would like to hear what others think. Personally I see a very difficult road ahead for businesses and just like SEO, which has already begun to fade and is becoming more difficult by the day, I believe Adwords is going to get just as bad or even worse....

rankmaster77, if I were in your shoes, I'd be spending my time in, speed of site, analytics, retargeting, GDN, in an effort to do your bit to bring the market prices back to a sensible level, you might sacrifice a little revenue in the short term, but it will pay off in the long term.

It's only going to get worse as Google gets more greedy and needs to hit those quarterly financial reports to keep investors happy.

The last time I checked, google doesn't pay out dividends, so it isn't so much to do with investor satisfaction. Anyone holding GOOG stock are holding it for long-term capital gains which is not reliant on quarterly performance.

If GOOG was really feeling warm fuzzies for investors to the point of wanting to "share the wealth" they would make their shares more affordable. Their share price as I write this is $683 per Class A Common Stock. That is out of reach for moms and pops. A 10 for 1 share split would make them affordable to the point where everyone could get in on the game but there is a reason why they won't do that. They want to keep the control tight and in the hands of only a relative few institutional players and the elite inner circle of those who eat out of their hand.

Time and time and time I keep telling people that investor satisfaction is an illusion.

Anyone holding GOOG stock are holding it for long-term capital gains which is not reliant on quarterly performance.

Capital gains not reliant on quarterly performance?

If Mr. Larry doesn't beat the street with revenue/earnings above what is projected on a quarterly basis the notion of a capital gain is pure fantasy.

Google knows what they are earning on a sub-second basis, any tweaks to search algos that send that earnings number lower is of vital importance to them. Where does all this magical thinking come from? Stock price doesn't matter..lala land

No it's not lala stuff if you realize that the market has a very real problem with short term memory, which is what the quarterly fluff is all about. The long-term buy and hold investors (real investors not speculators) are not influenced by quarterly performance, neither in a good way nor a bad way, only the media are.

Google don't set the prices advertisers pay, everyone is free to choose. They give guidance, based on the market at the time you want to get into it.

I've actually been very impressed with Larry Page as CEO, they did it the right way, they had Eric in early to handle institutional investors and they have acquired wisely to keep themselves ahead of the curve. Let's not forget that Yahoo were the dominant player in PPC early on, so Google did well to wrestle market share away and keep it.

For all the issues I have with AdWords (and I have a ton of em - I just don't get in here all that often anymore) I still love the program, and so do my clients. Because it works. My top client goes up against the likes of Amazon and the big office supply stores in both the organics and PPC, and for a significant portion of the product lines we totally PWN them in both. Because we're smaller and more flexible and don't have to do things on the ginormous scale.

My clients know about rising CPC costs and budgets, because guess what, costs rise in other channels as well. I told them from the getgo when we started with AdWords in 2002 that there should be NO BUDGET CONSTRAINTS as long as the ROI holds up. And there aren't. I've never had a budget change challenged; I don't even have to ask anymore.

All that said - my clients couldn't run their AdWords campaigns profitably without me to manage them. Google set up this great system (initially) but they have made it so confusing and added so many options and enhancements (and reduced so much customer service) that it's near impossible for the average Joe Business Owner to run his own campaigns and still have time to run his business. He can't even hope to keep up. And so far, every tool Google has released that's supposed to help is so heavily stacked in Google's favor that once Joe burns through his $100 freebie voucher, he gives up in disgust.

(Don't even get me started on the vouchers, which are the AOL CDs of this century. Somewhere along the line, Google decided that it was more important to try to attract new advertisers than try to give extra special service to its existing ones. Big mistake. Huge.)

But here's the thing - not every business model is gonna be a good match for AdWords. And not every person "gets it" no matter how much time they spend on it.

The most successful PPC campaigns (Bing & Google) that I run are for clients who actively focus on repeat business. Once they get that customer, they make sure they keep him over time. That means we have to track what we spent to get him, all the channels he uses, and how much revenue he brings in. That's a lot of analytics for a very small business to do on its own or to pay for. But every business should at least know how likely a customer is to purchase again.

If you are in a business model that doesn't get a lot of repeat business (and there are plenty of legitimate businesses like this) then AdWords just may not be the best choice for you, particularly if you are selling something low priced in a high-value-click market. That's not Google's fault, and it's not your fault either, but you do need to look rationally at what your choices are; once you're reasonably sure you've optimized the heck out of your PPC to the degree you're able, figure out a way to get repeat business that justifies the high CPC, or figure out how to use channels other than PPC to bring in your customers.

If you are in a highly competitive market, and you are reasonably sure your competitors are outbidding you and you can't figure out how they can afford to do it - take a gander at their business model, and see if they are focusing on repeat business as well. You can afford to spend a lot more money on a sale when you're pretty sure you'll get more of them. I've occasionally over the years run campaigns where the clicks cost more the products.

As far as people not being compatible with AdWords - the biggest issue I have when I take over an account from a client who has been managing it himself is usually that all his keywords are way too broad. He can't understand why he can run ads and rank on single word keywords, or extremely broad concepts. And neither I nor Google nor anyone else is ever gonna convince him that he's not entitled to advertise his Dallas Plumbing Supply on the keyword "plumbing" in a national campaign. (Those usually end up being ex-clients, or I don't take them on at all)

And to be brutally honest, not everyone can write a really compelling ad in 25/35/35. It's practically an art form in and of itself.

So, since Google seems unable to simplify it to the point where an average business owner can run it by himself, people who do client work will probably always have jobs if they want them.

And small to mid sized companies who can afford in house staff or PPC managers will continue to use AdWords.

And a bunch of people will get free $100 vouchers every year, try a few campaigns, and crash and burn.

Which is pretty much the way it is now.

My mini rant for Google [which, by the way, is the same rant I have for adCenter just in different areas] is to stop wasting my time. Over ten years now, I cannot seem to convince them that I have unlimited - literally unlimited budget for PPC as long as it brings sales, which it does. But I don't have unlimited time. And the more time I have to spend on doing stupid things, or deciphering fake error messages, or figuring out clueless help documents, or dealing with FRONT LINE SUPPORT when I probably know more about AdWords than any ten of them put together, the less money I have to throw in their ever lovin' corporate lap. Know what I'm sayin'?

~~~ I took a look back at last month, versus August last year, see attached stats. We have Tripled your PPC Sales Volume while simultaneously Doubling your Profit / ROAS Ratio. ~~~

negs, match types, segmentation, and LOTS of other boring hard work. all in a competitive space.

if you interviewed them a year ago, they'd likely have sounded like some gloom and doomers posting here about it not being possible to succeed. like netmeg, i know it's a ton of work, but it can be done. i see it all of the time.

we don't always succeed, but we so often find VERY basic things being done so wrong, that i just cannot join the "it's saturated by the big guys" parade.

the conundrum of businesses running it themselves is they might get some success and generate sales and leads, but the minute they turn their attention to the increase in sales and leads, they take their eye off the Adwords campaign, and like a circus plate spinner one of them is going to crash.

I agree with RhinoFish, since Adwords was a CPM buy back in 2001 it has ever been thus, broad keywords, bad ads, lousy landing pages and in spite of all of those things against advertisers they make some cash. Wonderful program.

Someone typing in the word suicide would find it at eBay, apparently it's a music group that had some albums on sale.

Somewhere on an old HD, I have a screenshot ( taken a couple of years ago ) of an adwords ad (it actually ran as an adsense ad on "el reg" next to an article on childpron site takedowns ) for "molestation..get your ..........cheap" on ebay*....

Some ebay affs...

*I deliberately used the word only once so as to not pull searches for........ to here..

If you ever saw me exhort AdWords or adCenter on twitter or the help forum, you wouldn't think I was much of a spokesperson for Google. The fact that something has flaws doesn't mean the entire thing has gone to hell in a handbasket. The only way I'm ever gonna succeed at any of this online stuff is if I keep my emotions out and my eyeballs clear.

Actually netmeg I didn't see you promoting adwords, I saw you reinforce the problem with adwords, I referring to self promotion, how you (and a few others) made clear that the average Joe doesn't stand a chance against those who are immune to googley kryptonite, able to leap small budgets and all that jazz.

I do thank you for providing a little background on what does work for you. That doesn't mean adwords works as advertised nor does it mean that it works at all for a good chunk of dupes willing to put up a credit card.

That doesn't mean adwords works as advertised nor does it mean that it works at all for a good chunk of dupes willing to put up a credit card.

Nope, it doesn't. But that's actually true of everything, including print advertising and yellow pages. There is no level playing field in advertising; whoever has the most money usually wins. And actually, in my experience, the little guy does have a marginally better shot at AdWords, but not unless he takes the time to thoroughly learn the system, or hires someone who has.

Well said Netmeg and agree 100% with all you said, as usual. I feel like I'm also a cousin along with RhinoFish.

TypicalSurfer, I think the Average Joe does have a chance. However, most won't ever reach the levels of Netmeg, RhinoFish, myself and others who do this full time simply because it's not their thing nor would I expect it to be, they have better things to do. But smart business owners know they can't do all things and do them all well. So their get someone to do it for them. If you talk to successful and rich people, that's one of their secrets: they delegate and give jobs they can't/won't do to someone who does. If you were accused of a murder, who you represent yourself? I suggest getting a lawyer and a better chance of getting off (presuming you're truly innocent).

I have 5 times fired my lawyers ( I was not accused of murder ;-)..I won the case each time ..and each time was also complimented by the judges on my presentation of the case..( the lawyers of the opposing side were 3 times reprimanded for being in essence "crap"..( the words were "ill prepared", "negligent" and "arrogant" ) and I'm not trawling / looking for clients.. when I post that fact..

There is a place for adwords specialists..because as netmeg says, G make the system very near incomprehensible ( IMO so as to burn through the budgets of advertisers ) ..But, the association of who bids the most money as a way of increasing "quality score" , does IMO debase the word "quality"..

And there is no ( as far as I can ascertain over many years of watching where ads lead in many niche(s) in various languages ) system for "policing ads" which get good CTR by lying about what lies the other side of the click through..if there is such a system ..in very many cases it is not working and may as well not exist..but G get paid anyway..so I don't expect them to change that ..

I refer back to the OP which was simply questioning whether or not google could sustain long term pricing issues. It kinda devolved from there with the super-hero-PPC-consultants referring to those who think that the model is vulnerable as idiots or amateurs.

I do thank you for elaborating on your success but big margins are inherently ephemeral in a PPC environment, they eventually shrink, now being a PPC-super-hero you can simply trade horses and ride into the sunset with another big margin horse when the one you're riding loses it legs but if you are nailed down to a business the challenges are a bit different but again, I do thank you for your insights.

My personal take is that the PPC model is flawed for a lot of advertisers, that google misrepresents what they are selling (self-service, pay for "performance", bla, blah) and that the market will step up and fill a void, it's business cycle 101.

If bing or some other not yet known entity ran 10 cents clicks and put ads in rotation they could displace google in a few months. Of course that might even displace the PPC-super-heros.

out of the box Adwords is just plain horrible for first time advertisers, but it's better to have it, than not have it.

Google are not mis-representing what they sell. They make it really easy for a first time advertiser to serve themselves some ads. Chances are people will read a little bit about what to do, will follow the suggested path of keywords and price, which are based on the existing auction that is going on at the time they start.

What happens on Google will always be where the battle will start, I just think with video, mobile, social, site speed, analytics, lifetime value, sales funnels there are better uses of budget than trying to squeeze more out of a model that I think we all agree could be better than it currently is.

Maybe we agency/consultant people are the idiots for even trying to put forward opinions.

The original question was about Google sustaining prices, but Google don't set the prices, the advertisers do. If you sold something totally off the wall and there was nobody else that did, you could and would get super cheap traffic, if you set your bid prices in that region.

I've NEVER set a bid price at the suggested rate Google put down, sometimes it's a lot more, other times a lot less. Occasionally, the price I end up paying is what they suggest, but I never start at that point.

There are numerous places where you can serve ads in rotation for 10 cents a click, some for even less than that, but quality and quantity of traffic will always mean that scenario won't play out. The minute people "find" a new source, they will blog about it. tweet about it and the 10 cent clicks become $2 clicks and advertisers vote with their feet.